Unit 8 Questions

Question 1

A history of all recorded liens and encumbrances is revealed in the

Answer 1

abstract

Why?

The title insurance policy lists coverage and exceptions to the policy. Unrecorded documents have not been examined. The chain of title traces ownership. The abstract is the most complete documentation of recorded liens and encumbrances.

Question 2

Any individual who is interested in a particular property may review the public records to learn about the documents, claims, and other issues that affect its ownership.

Answer 2

True. 

Why?

Public records are open to anyone interested in a particular property. A review of the records will reveal the documents, claims, and other details that affect its ownership.

Question 3

In the states in which it has been adopted, the Marketable Title Act

Answer 3

limits the time beyond which title records must be searched.

Why?

The law extinguishes certain interests and cures certain defects arising before the root of the title.

Question 4

Constructive notice means that information about a property is not only available, but that someone has been given access to that information.

Answer 4

False. 

Why?

Actual notice means that not only is the information about property available, but someone has been given access to that information.

Question 5

Five years ago, a lien was recorded against a parcel of property by a construction company. When the lien was recorded, a man was the owner of the property and a woman was an active partner in the construction company. The property is in county A, but the lien was recorded in county B. Now, the woman is trying to buy the property from the man. A title search in county A disclosed no liens against the property. Which of these is TRUE?

Answer 5

The woman has actual notice of the lien but not constructive notice, because of the mistake in recording.

Why?

Because the woman was a partner, she knew that the lien was filed. Constructive notice is not given because the lien was not filed in the county where the property is located, which is where it would be expected to be filed.

Question 6

To serve as public notice, a deed is recorded in the

Answer 6

county or, in some states, the town where the property is located.

Why?

county or, in some states, the town where the property is located.

Question 7

The person who prepares a certificate of title is the

Answer 7

The abstractor

Why?

searches all of the public records, and then summarizes the various events that affected the title throughout its history.

Question 8

A title insurance policy that protects the interests of a mortgagee is called

Answer 8

a lender’s policy.

Why?

The mortgagee is the lender. The mortgagee’s policy is transferable.

Question 9

Any written document that affects any estate, right, title, or interest in land must be recorded in the county in which the property owner resides.

Answer 9

False. 

Why?

Any written document that affects any estate, right, title, or interest in land must be recorded in the county or, in some states, town in which the property is located.

Question 10

A certificate of title is a guarantee of legal ownership.

Answer 10

False. 
Why?

A certificate of title is evidence but not a guarantee of ownership. A certificate of title is a statement of opinion of the title’s status on the date the certificate is issued.

Question 11

All of these are acceptable evidence of an owner’s title EXCEPT

Answer 11

A recorded deed

Why?
is nothing more than that. Other verifications of thorough examinations of recorded documents can affect the title.

Question 12

In a typical title search, the chain of title is examined, beginning with the earliest records of ownership and proceeding forward up to the present owner.

Answer 12

False. 
Why?

In a typical title search, the chain of title is examined beginning with the present owner and tracing backwards to the earliest records of ownership or a definite period of years, depending on state statute.

Question 13

The term chain of title refers to the record of a property’s ownership.

Answer 13

True. 

Why?

The chain of title is the record of a property’s ownership, beginning with the earliest owner.

Question 14

The reason that deeds and liens and other claims are recorded is to give

Answer 14

constructive notice.

Why?

The recorder’s office is a central place to deposit and discover information. If it is recorded, researchers cannot claim ignorance; they would have known if they had researched the records.

Question 15

To be eligible for recording, a document pertaining to real estate must be drawn and executed in accordance with the requirements of the federal government.

Answer 15

False. 

Why?

To be eligible for recording, a document pertaining to real estate must be drawn and executed in accordance with the requirements of the recording acts of the state in which the property is located.

Question 16

An extended standard coverage title insurance policy protects a homeowner against rights of parties in possession and unrecorded liens.

Answer 16

True. 
Why?

Extended coverage as provided by an American Land Title Association (ALTA) policy includes the protections of a standard policy plus additional protections.

Question 17

A woman purchased property from a man. Shortly after closing, the woman discovered that there were serious flaws in the title that made it unlikely that the property could be resold in the future. What can she do now?

Answer 17

Because the woman has accepted the deed, her only recourse is to sue the man under any covenants contained in the deed.

Why?

Professionals should look at the evidence of ownership before closing. There is more leverage to get problems corrected before closing than after closing.

Question 18

Which of these would be covered in a standard title insurance policy?

Answer 18

Forged documents

Why?

Title insurance does not protect against claims of parties in possession because the grantee should have visited the property; nor does it cover unrecorded liens. Easements and restrictive covenants are found in the deed and should be known to the grantee.

Question 19

One of the requirements of marketable title is that it could convince a reasonably well-informed and prudent purchaser, acting on business principles and with full knowledge of the significant facts, that the property could be resold or mortgaged at a later time.

Answer 19

True. 

Why?

A marketable title should disclose no serious defects, should not depend on doubtful questions of law, and should convince a reasonably well-informed and prudent purchaser, acting on business principles and with full knowledge of the significant facts, that the property could be resold or mortgaged at a later time.